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Is the Aggregate Size of Government in Canada Too Large?

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This paper asks whether consolidated government in Canada is too large in relation to its effect on economic performance. Rather than impose a parametric shape, nonparametric methods are used to motivate the nonlinear form that best describes this relationship. Using data from 1929 through 2014 and controlling for the different time-series characteristics of the variables, the bias in standard errors that can be expected from correlations arising across time, and the presence of Wagner's-law-type endogeneity in the relationship running between government size and private performance, we find evidence consistent with government size peaking in its effect on private output at roughly 32 percent of GDP. (JEL: H21, H23, C22, C26)
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Document Type: Research Article

Publication date: 01 December 2017

This article was made available online on 28 February 2017 as a Fast Track article with title: "Is the Aggregate Size of Government in Canada Too Large?".

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  • Founded as Zeitschrift für die gesamte Staatswissenschaft in 1844.

    As one of the oldest journals in the field of political economy, the Journal of Institutional and Theoretical Economics (JITE) deals traditionally with the problems of economics, social policy, and their legal framework. JITE is listed in the Journal of Economic Literature, the Social Science Citation Index, the International Bibliography of the Social Sciences, and COREJ.

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    From 2013 on all accepted articles are published in an Online First version (in their final layout) to make them searchable and citable by their DOI immediately after peer review and acceptance. Once the article is published in an issue of the journal, the Online First version will be removed.

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